The US dollar’s share of global foreign exchange reserves fell to its lowest in three decades in the second quarter of the year, the International Monetary Fund (IMF) has said.
The greenback accounted for 56.3 per cent of the allocated reserves between April and June, down 1.5 percentage points from the previous quarter and the smallest proportion since 1995, although the drop was largely due to currency moves rather than active selling by central banks, said the IMF report.
“Exchange-rate effects drove nearly all the decline in the US currency’s share of foreign exchange reserves,” IMF researchers Glen Kwende, Erin Nephew, and Carlos Sanchez-Munoz said. They estimated that about 92 per cent of the fall was due to valuation shifts.
The dollar slid 9 per cent against the euro, 11 per cent versus the Swiss franc, and 6 per cent against the pound sterling in the period, weighed down by US President Donald Trump’s tariff hikes, his pressure on the Federal Reserve to cut rates and deficit-raising tax changes passed on July 4, said the IMF. The total allocated foreign exchange reserves stood at $12.03 trillion at the end of June.
In the first half of 2025, the dollar fell more than 10% against major currencies, marking its worst start to a year since 1973. The recorded downturn contrasted with the dollar’s traditional role as a safe-haven asset.
Russia has accelerated efforts to move away from the dollar and euro after many of its financial institutions were cut off from the Western financial system in 2022. It has ramped up trade with international partners using their national currencies. The trend has been increasingly supported by BRICS members, which have shifted from using Western currencies for trade settlements.
Major BRICS economies have already started reducing their reliance on the dollar as the weaponisation of the greenback through sanctions has pushed businesses to look for alternative payment options.
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